Nanny taxes can be confusing, both for the employee and the
employer. Software used to process returns for both individuals
should have several components to ensure that these taxes are
properly calculated. Nanny wages impact the employer's taxes and
should be reported on a Schedule H form. The nanny's W-2 form must
also be included with the employer's filing. Software should be
able to handle FUTA wages and reconcile Social Security and
Medicare differences.